Home » Articles » Economic Development in the 1930s: Balance Agriculture with Industry

Hugh White, father of the Balance Agriculture with Industry plan, was mayor of Columbia before he was twice elected governor of Mississippi (1936-1940 and 1952-1956). Courtesy, Mississippi Department of Archives and History

The Mississippi Advertising Commission ran advertisements in publications across the country. This ad, which appeared in the May 1937 edition of Fortune magazine, promoted the state’s “friendly, native Anglo-Saxon labor.” Courtesy, Mississippi Department of Archives and History

A page from “It’s a Fact,” a booklet of cartoon releases published around 1936 by the Mississippi Advertising Commission to “acquaint the reader with some facts about Mississippi which should be better known.” Courtesy, Mississippi Department of Archives and History

The Mississippi Advertising Commission advertisement in August 1937 which ran in Time, Business Week, and Nation’s Business magazines, and in newspapers such as The New York Times, Kansas City Star, Chicago Journal of Commerce, Omaha World-Herald, St. Paul Dispatch Press, Philadelphia Inquirer, Buffalo News, Boston Post, and Baltimore Sun.Courtesy, Mississippi Department of Archives and History

Economic Development in the 1930s: Balance Agriculture with Industry

By Connie Lester

In 1929 the mayor of Columbia, Mississippi, Hugh Lawson White, gazed
out his office window and contemplated the town’s future. Located
in the Piney Woods region, Columbia had depended on the cutting and milling
of longleaf yellow pine as the principal source of employment for its
4,000 residents. By the middle of the 1920s with the vast stands of pine
“timbered out,” the largest companies packed up their machines,
sold their buildings for scrap, and moved on to new, more promising locations.

Columbia would refuse to die

White, a former lumberman, surveyed the “sawmill graveyards”
of muddy ground and stumps, and decided that Columbia would not disappear
like other lumbermill towns; it would “refuse to die.”

With White’s encouragement, Marion County organized a Chamber of
Commerce and secured a small textile mill and a canning factory. Up until
this time, community efforts deviated little from past southern industrial
development: local business boosterism attracted small industrial processors
which used local resources.

What White and Columbia did next changed the way Mississippi and the
South thought about industrialization.The plan White conceived in 1929
brought new economic growth to Columbia and launched the “Balance
Agriculture with Industry” program that Mississippi later adopted
during the Great Depression of the 1930s.

Employing the services of a Chicago-based industrial relocation firm,
White approached Reliance Manufacturing Company, a maker of men’s
dress shirts and pajamas. The company expressed an interest in establishing
a Columbia factory if the town would guarantee $85,000 for the construction
of a building to house the plant. In return, Reliance promised to employ
300 workers (increasing to 700 workers) and to pump $1 million in wages
into the local economy over ten years.

The people build a factory

Rather than asking a few prominent businessmen to pledge the necessary
funds for building the factory, Mayor White declared a two-hour holiday
to hold a community meeting and decide the matter. After discussing the
proposition, businessmen, secretaries, clerks, schoolteachers, and farmers
signed promissory notes, payable over several months, to guarantee the
funding. With the pledges in hand, White obtained a loan from New Orleans
bankers for the full amount needed to start construction of the factory.
The modern brick building Reliance Manufacturing soon occupied belonged
to the people and represented their expectations for future prosperity.

Reliance executives worried that Columbia and Marion County could not
provide sufficient skilled labor to meet the demands of the company. But
when factory representatives held a hiring fair to take applications for
the first 300 jobs, almost 1,500 women applied. To equip the workers with
the necessary skills to meet the exacting demands of a modern textile
plant, White and his associates opened a training school using the company’s
equipment and Reliance supervisors as teachers. Initially the student
workers trained without pay until they reached an agreed-upon level of
skill. Not surprisingly, most of the workers were farm women whose wages
brought sorely needed money to the area’s small farms.

White claimed immediate success for his plan. The Reliance plant opened
in July 1932 and within four years, the factory met the employment and
wage promises it expected to fulfill over a decade. The wages paid by
Reliance benefited farm families and local merchants. The Columbia Plan
was all the more impressive because it succeeded during a period of national
economic failure.

Mississippi enters the Depression

By any measure, Mississippi entered the Great Depression far behind the
rest of the nation. The mere 52,000 industrial jobs the state claimed
in 1929 fell to 28,000 by 1933. Bank deposits dropped from $101 million
to $49 million over the same three-year period. Nearly 1,800 retail stores
closed as sales shrank from $413 million to $140 million. Farm income
was reduced by 64 percent. The average annual income, already the worst
in the nation at $287, fell to an unbelievable $117. On a single day in
1932, one-fourth of the state’s farm land was sold for taxes.

Mississippi families struggled to survive in a state that had no money
to aid the impoverished and no social service agencies to distribute aid
if money had been available. The desperation of the situation forced Mississippi
to re-evaluate its relationship to the federal government and formulate
an economic plan of action at home.

Roosevelt’s New Deal put money into the Mississippi economy through
a variety of agencies and programs. The Agricultural Adjustment Agency
(AAA) promised to raise farm prices through crop reduction; the Civilian
Conservation Corps (CCC) hired young men to reforest badly eroded land;
the Works Progress Administration (WPA) built piers, highways, schools,
airports, and national guard armories. The Tennessee Valley Authority
and Rural Electrification Administration brought modernity to rural families
in a state where few families had access to electricity. Although Mississippians
traditionally avoided federal programs, Fred Sullens, the editor of the
Jackson Daily News believed they supported the New Deal “stronger
than horseradish.”

Man with a plan

Mississippi could not rely on New Deal programs forever; a transformation
of the state’s economy was vital. The man with a plan was Hugh White,
who successfully ran for governor in 1935 on the promise to balance agriculture
with industry. White recognized that the Columbia Plan could not be applied
statewide – enthusiastic local support could work wonders, but chambers
of commerce were the exception in Mississippi towns, and the lack of surplus
capital and expertise limited the potential for success and raised legitimate
concerns that small town industrial delegations would be victimized by
unscrupulous con men.

The Balance Agriculture with Industry Program (BAWI) White proposed to
the Mississippi Legislature met those concerns with a two-tiered plan
of “state sponsorship and control” balanced by “local
financing and operation.” Although the scheme moved Mississippi
toward state economic planning that mimicked New Deal programs, the plan’s
directors operated in a conservative manner.

The Mississippi Constitution clearly prohibited the use of the credit
of the state to support industrial development and likewise enjoined municipalities
and counties from becoming subscribers to capital stock in corporations
– the very thing BAWI proposed. To evade the legal barriers, White
appointed six Jackson attorneys to draft a bill that would meet the constitutional
test.

Mississippi Industrial Act

Seizing on a recent U.S. Supreme Court decision (Greene v. Frasier)
that empowered the state to determine the limits of the general welfare
clause of the constitution, the authors of the BAWI bill presented the
legislation as a “necessity to protect [the] people.” In a
special session convened in September 1936, the legislature passed the
Mississippi Industrial Act. Arguing that “the present and prospective
health, safety, morals, pursuit of happiness, right to gainful employment,
and general welfare” dictated their actions, the act created a three-member
commission to oversee the program and outlined their duties.

The act empowered the commission to issue certificates of public convenience
and necessity that allowed cities and counties to hold bond elections
to finance land purchases and plant construction. The certificates also
validated the existence of surplus labor of at least one-and-one-half
workers for every prospective job. In addition, the commission screened
proposals from firms interested in the BAWI program. Prospective businesses
learned about BAWI through advertisements placed in magazines and trade
journals by the Mississippi Advertising Commission. As hopeful participants
submitted their proposals, the Industrial Commission sifted through them
to evaluate their potential for success.

The commission quickly narrowed the initial 3,800 inquiries from interested
firms to a more manageable 300. A second culling narrowed the number to
sixty. From these, the commission issued 21 certificates, and twelve firms
actually established plants in Mississippi. The manufacturing plants were
scattered across the state: three in Pascagoula – Ingalls Shipyard,
Jackson County Mills, and W.G. Avery Body Co.; Grenada Industries in Grenada;
Armstrong Tire and Rubber Co. in Natchez; Lebanon Shirt Co. in Union;
I.B.S. Manufacturing Co. in New Albany; Crystal Springs Shirt Co. in Crystal
Springs; Winona Bedspread Co. in Winona; Real Silk Hosiery Mill in Durant;
Ellisville Hosiery Mills in Ellisville; and Hattiesburg Hosiery Co. in
Hattiesburg.

Praise for BAWI

The BAWI plan attracted a number of admirers. The newly established Southern
Governors Conference gave its stamp of approval to the Mississippi program
and encouraged other states to introduce similar plans. E. J. Hopkins,
the chief economist for the Federal Reserve Bank of Atlanta, published
an analysis of BAWI in 1944 in which he demonstrated the positive impact
of industrial wages on the Mississippi economy and anticipated a revival
of the scheme as a model for post-World War II economic development. He
praised the Columbia experiment for capturing the surplus labor of farm
women, an initiative that allowed the factory to support the farm.

According to Hopkins, wages from the new plants rose from $1.4 million
in 1939 to $17.9 million in 1942 on a total sale of $980,500 in public
bonds – a good investment in the state’s effort to “purchase
payrolls.”

Legality of BAWI is tested

Some Mississippians viewed the BAWI program as socialistic and determined
to test its legality. After voters in Winona narrowly supported a bond
issue to construct a plant, W. S. Albritton, a local citizen and railroad
employee, filed a suit charging that BAWI was unconstitutional. Defeated
in chancery court, he took his case to the Mississippi Supreme Court where
the justices ruled 5 to 1 that the measure met constitutional tests under
the general welfare clause. Although recognizing that the act departed
from traditional concepts of state power, the justices noted that “every
intervention of any consequence by the state and national government in
the economic and social life of the citizen has been so branded.”
Albritton’s appeal to the U.S. Supreme Court was rejected on grounds
that the issue was a state matter.

A mixed legacy

Economists argued, with some justification, that BAWI provided incentives
to firms that least needed support. The only plants approved by the commission
were expansions of older, well-established firms. The strict criteria
established by the commission effectively eliminated a number of innovative,
but riskier, firms from consideration. Evidence of fiscal stability protected
the public investment of tax dollars and assured immediate jobs, and critics
claimed that such firms might expand into Mississippi without subsidies.
But Mississippi’s desperate situation demanded stability and security,
and the BAWI commission operated to provide it.

Labor leaders pointed to the low-wage history of the state as evidence
that BAWI represented a bonanza for industry without improving the lot
of Mississippi’s working poor. Even the economist E. J. Hopkins
recognized that the state’s long history of poverty, its large unskilled
labor force, the few alternatives for employment, and the failure to include
a minimum wage provision in the BAWI enabling legislation invited abuse.
But he dismissed the “shrewd” business practices that took
advantage of the low wage climate as “regrettable rather than remarkable.”

Except for Ingalls Shipyard in Pascagoula and the Armstrong Tire and
Rubber Plant in Natchez, most of the new industries were traditional low-wage
textile firms that attracted largely female labor. Mississippi advertised
its program by noting the abundance of “Anglo-Saxon” workers
available for employment. Clearly black Mississippians, still largely
employed in agricultural work, need not apply. Advertisements claimed
that workers were, or could be, well-trained.

New Deal grants to build training facilities that were equipped and operated
by the new factories came under federal scrutiny when investigative journalists
charged that WPA-funded “training programs” at Ellisville
and Brookhaven operated as sweatshops for the benefit of local mills.
As “class” after “class” passed through the training
programs without obtaining employment, the WPA cried fraud and demanded
a return of the federal money invested in the so-called vocational schools.

Finally, Mississippi’s well-known animosity toward labor unions
invited the relocation of firms antagonistic to labor demands. The anti-labor
reputation of the state united labor unions and manufacturers’ associations
in complaints that Mississippi engaged in unfair practices to attract
new industries.

Historians of southern industrialization view the legacy of BAWI as mixed.
The determination to balance agriculture with industry, and not simply
invite industrial development for short-term gains, represented a transformation
of the state’s economic outlook. Nevertheless, the unwillingness
to protect workers and invest in new innovative industries perpetuated
low-wage, unskilled, no-benefits employment. While acknowledging the importance
of this transition from farm to factory, these historians note that Mississippi
remains at the bottom of the economic ladder.

Posted May 2004

Connie Lester, Ph.D., is a professor of history at Mississippi State
University.

References:

Cobb, James C. The Selling of the South: The Southern Crusade for
Industrial Development, 1936-1980. Baton Rouge: Louisiana State University
Press, 1982, p.14.